QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS
                 SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS

                                   FORM 10-QSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[x]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
         OF 1934

                  For the quarterly period ended June 30, 1999

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
         OF 1934

                        Commission File Number: 001-14005

                            FRISBY TECHNOLOGIES, INC.
             (Exact Name of Registrant as Specified in its Charter)

            Delaware                                    62-1411534
 (State or other Jurisdiction of                     (I.R.S. Employer
  Incorporation or Organization)                   Identification Number)

                               77 East Main Street
                                   Suite 2000
                            Bay Shore, New York 11706
              (Address of Principal Executive Offices and Zip Code)
                                 (516) 969-8570
              (Registrant's telephone number, including area code)



     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                   Yes       X               No  ________

     Number of shares  outstanding of the issuer's Common Stock, par value $.001
per share, as of July 31, 1999, 5,708,113 shares.



<PAGE>


                            FRISBY TECHNOLOGIES, INC.

<TABLE>
<CAPTION>

                                      INDEX

                                                                                                    PAGE NO.
<S>                                                                                                 <C>

Part I            Financial Information

Item 1.           Financial Statements

                  Balance Sheets - June 30, 1999 (unaudited) and
                  December 31, 1998                                                                    3

                  Statements of Operations - Three Month and Six Month Periods Ended
                  June 30, 1999 (unaudited) and June 30, 1998
                  (unaudited)                                                                          4

                  Statement of Stockholders' Equity - Six Month Period
                  Ended June 30, 1999 (unaudited)                                                      5

                  Statements of Cash Flows - Six Month Period Ended
                  June 30, 1999 (unaudited) and June 30, 1998 (unaudited)                              6

                  Notes to Financial Statements - June 30, 1999 (unaudited)                            7

Item 2.           Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                            8

Part II           Other Information                                                                   13

                  Signatures                                                                          16


</TABLE>

<PAGE>


                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

                            Frisby Technologies, Inc.
                                 Balance Sheets
<TABLE>
<CAPTION>

                                                                              June 30, 1999           December 31, 1998
                                                                              -------------           -----------------
                                                                               (unaudited)

<S>                                                                             <C>                    <C>
Assets
Current assets:
Cash and cash equivalents                                                       $     2,824,381        $     6,516,138
Marketable securities                                                                 1,556,441              1,555,683
Accounts receivable                                                                   1,704,897              1,104,134
Inventory                                                                               791,806                671,569
Prepaid and other current assets                                                        279,433                595,998
                                                                           ---------------------    -------------------

Total current assets                                                                  7,156,958             10,443,522
Property and equipment, net                                                             568,107                277,494
Intangible assets, less accumulated amortization                                      1,986,103              2,000,700
Other assets                                                                            291,994                391,516
                                                                           ---------------------    -------------------
Total assets                                                                     $   10,003,162       $     13,113,232
                                                                           =====================    ===================


Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                                              $       1,026,889        $       868,649
Accrued expenses and other current liabilities                                          154,641                385,533
Payable to Triangle Research and Development Corporation                                    -                  400,000
License fees payable                                                                    257,683                189,726
Deferred license revenues                                                                58,752                 85,000
                                                                           ---------------------    -------------------

Total current liabilities                                                             1,471,715              1,928,908
Accrued license agreement costs                                                         120,250                120,250
Deferred license revenues                                                                55,000                 46,250
Other liability                                                                       1,300,000              1,300,000
                                                                            ---------------------    -------------------
Total liabilities                                                                     2,973,215              3,395,408
Commitments
Stockholders' equity:
Preferred Stock, 1,000,000 shares authorized; 587,500 shares issued and
  outstanding at December 31, 1998                                                            -              2,479,000
Common Stock, $.001 par value; 10,000,000 shares authorized;
  shares issued and outstanding: 5,708,113 in 1999 and 5,120,613 in 1998                  5,708                  5,121
Additional paid-in capital                                                           14,678,241             12,199,828
Accumulated other comprehensive income                                                   21,745                 21,000
Accumulated deficit                                                                 (7,675,747)            (4,987,125)
                                                                           ---------------------    -------------------
Total stockholders' equity                                                            7,029,947              9,717,824
                                                                           ---------------------    -------------------
Total liabilities and stockholders' equity                                       $   10,003,162        $    13,113,232
                                                                           =====================    ===================

</TABLE>
See accompanying notes.


<PAGE>


                            Frisby Technologies, Inc.
                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>


                                             Three month period ended                       Six month period ended
                                                     June 30,                                      June 30,
                                    -------------------------------------------     ----------------------------------------
                                           1999                   1998                   1999                   1998
                                    -------------------    --------------------     ----------------     -------------------
<S>                                       <C>                        <C>               <C>                       <C>

Revenues:
    Product sales                         $  1,668,526               $ 546,765         $  2,498,946              $  818,140
    Research and development                    44,875                  79,421              146,250                 128,692
      projects
    Licenses and royalties                     162,249                  48,050              257,280                  74,668
                                    -------------------    --------------------     ----------------     -------------------
Total revenues                               1,875,650                 674,236            2,902,476               1,021,500

Cost of sales:
    Product sales                            1,272,039                 530,886            1,929,240                 752,699
    Research and development                    86,907                  64,203              168,842                  98,981
projects
    Licenses and  royalties                    130,800                   5,541              237,257                   7,304
                                    -------------------    --------------------     ----------------     -------------------
Total cost of sales                          1,489,746                 600,630            2,335,339                 858,984
                                    -------------------    --------------------     ----------------     -------------------
Gross profit                                   385,904                  73,606              567,137                 162,516
Selling and marketing expense                  748,185                 224,719            1,496,185                 444,867
General and administrative expense             976,184                 641,553            1,892,140               1,042,546
                                    -------------------    --------------------     ----------------     -------------------
Loss from operations                       (1,338,465)               (792,666)          (2,821,187)             (1,324,897)
Interest income                                57,336                 111,135              132,565                 114,019
                                    -------------------    --------------------     ----------------     --------------------
Net loss                                 $ (1,281,129)             $ (681,531)        $ (2,688,622)           $ (1,210,878)

                                    ===================    ====================     ================     ===================


Net loss per common share - basic           $   (0.22)              $   (0.14)           $   (0.50)              $   (0.30)
and diluted
                                    ===================    ====================     ================     ===================
</TABLE>
See accompanying notes.


<PAGE>


                            Frisby Technologies, Inc.
                   Statement of Stockholders' Equity (Deficit)
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                                  Accumu-
                                                                                  lated
                                                                                  Other
                                                                   Additional     Compre-  Accumu-
                       Preferred Stock      Common Stock            Paid-In       hensive  lated
                   Shares    Amount      Shares       Amount        Capital       Income   Deficit       Total
<S>                <C>      <C>         <C>          <C>          <C>            <C>      <C>            <C>

Balance at
December 31, 1998  587,500   $2,479,000  5,120,613    $5,121       $12,199,828    $21,000  $(4,987,125)  $9,717,824

Conversion of
Preferred Stock   (587,500)  (2,479,000)   587,500       587         2,478,413

Net loss                ---      ---         ---         ---          ---            ---   (2,688,622)   (2,688,622)

Unrealized gains
on marketable
securities              ---      ---         ---         ---          ---             745      ---              745
                                                                                                         ----------

Comprehensive
(loss)                  ---      ---         ---         ---          ---            ---       ---       (2,687,877)

                  ---------  ---------- ---------     ------      -----------     -------  ------------ -----------
Balance at
June 30, 1999           ---  $   ---    5,708,113     $5,708      $14,678,241     $21,745  $(7,675,747)  $7,029,947
                  =========  ========== =========     ======      ===========     =======  ============  ==========
</TABLE>
See accompanying notes.




<PAGE>



                            Frisby Technologies, Inc.
                            Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                     Six month period ended
                                                                                            June 30,
                                                                           -------------------------------------------
                                                                                  1999                    1998
                                                                                  ----                    ----
<S>                                                                           <C>                   <C>

Operating activities
Net loss                                                                      $    (2,688,622)       $     (1,210,878)
Adjustments to reconcile net loss to net cash used in operating
    activities:
Depreciation and amortization                                                          84,937                   9,304
Non cash consulting expense                                                            70,000                  60,000
Amortization of intangibles                                                           102,600                    --
Changes in assets and liabilities, prior to effect of acquisition:
Accounts receivable                                                                  (595,159)               (207,498)
Inventory                                                                             (91,714)               (281,918)
Other current assets                                                                  246,565                (388,427)
Other non-current assets                                                               99,522                  62,097
Accounts payable                                                                      139,961                 318,084
Accrued expenses and other current liabilities                                       (230,892)                169,648
Licenses fees payable                                                                  67,957                (133,710)
Deferred licenses reveneues                                                           (17,498)                  1,436
                                                                           -------------------     -------------------
Net cash used in operating activities                                              (2,812,343)             (1,601,862)
                                                                            -------------------     -------------------

Investing activities
Purchases of property and equipment                                                  (375,550)                (19,944)
Purchases of short-term investments                                                     --                 (8,753,702)
Purchase of intangible assets                                                        (400,000)                   --
Purchase of business, net of cash acquired                                           (103,864)                   --
                                                                           -------------------     -------------------
Net cash used in investing activities                                                (879,414)             (8,773,646)
                                                                           -------------------     -------------------

Financing activities
Net proceeds from exercise of convertible preferred stock option                       --                   2,479,000
Net proceeds from initial public offering                                              --                  10,396,592
                                                                           -------------------     -------------------
 Net cash provided by financing activities                                             --                  12,875,592
                                                                           -------------------     -------------------

Net (decrease) increase in cash and cash equivalents                              (3,691,757)               2,500,084
Cash and cash equivalents - beginning of period                                    6,516,138                  375,222
                                                                           -------------------     -------------------
Cash and cash equivalents -end of period                                       $   2,824,381           $    2,875,306
                                                                           ===================     ===================
</TABLE>
See accompanying notes


<PAGE>


                            Frisby Technologies, Inc.
                          Notes to Financial Statements
                            June 30, 1999 (Unaudited)

     1. Basis of Presentation

     The  accompanying  unaudited  financial  statements  have been  prepared in
conformity  with  generally  accepted  accounting  principles  and  reflect  all
adjustments  consisting of normal recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the results for the periods
shown. The results of operations for such periods are not necessarily indicative
of the results  expected for the full fiscal year or for any future period.  The
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates and assumptions.

     The accompanying  financial  statements  should be read in conjunction with
the audited financial  statements of Frisby  Technologies,  Inc. (the "Company")
for the year ended  December  31, 1998 and the notes  thereto  contained  in the
Company's  Annual Report on Form 10-KSB,  filed with the Securities and Exchange
Commission on March 31, 1999, as amended.

     2. Summary of Significant Accounting Policies

     Net Loss Per Share

     Net loss per share for the three and six month  periods ended June 30, 1999
and 1998 are based on the weighted  average number of common shares  outstanding
during the period in  accordance  with the  Statement  of  Financial  Accounting
Standard ("SFAS") No. 128 "Earnings Per Share."

     Shares used in the  computation of net loss per share for the three and six
month periods ended June 30, 1999 were  5,708,113 and  5,414,363,  respectively.
Shares used in the computation of net loss per share for the three and six month
periods  ended June 30, 1998 were  5,037,995  and  4,036,259  respectively.  The
number of shares  used in the  calculation  of net loss per share on a basic and
diluted basis is the same.

     3. Shareholders' Equity

     On April 6, 1999, the Company  received  notice from the shareholder of the
Convertible  Preferred  Stock of its  decision to convert the 587,500  shares of
Convertible Preferred Stock shares into Common Stock. This transaction increased
the number of outstanding common stock to 5,708,113.



<PAGE>


     ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS.


     Results of  Operations  for the three and six month  periods ended June 30,
1999 compared with the three and six month periods ended June 30, 1998

     Revenues.  The Company  generates  revenue from three primary sources:  (i)
sales of its Thermasorb(R)  additives and ComforTemp(R) foam products for use in
its  strategic  partners'  products;  (ii) sales of its  SteeleVest(R)  personal
cooling systems;  (iii) revenue from research and development  contracts related
to the United States government and private companies; and (iv) license fees and
royalties  from the use of the  Thermasorb(R)  and  ComforTemp(R)  trademarks by
strategic  partners  in  end-use  products,  as well as  other  fees  earned  in
connection with its agreements with strategic  partners.  Total revenues for the
three month period ended June 30, 1999  increased by  $1,201,414  to  $1,875,650
from $674,236 for the three month period ended June 30, 1998. Total revenues for
the six month period ended June 30, 1999  increased by  $1,880,976 to $2,902,476
from $1,021,500 for the six month period ended June 30, 1998.

     Product sales. Product sales for the three month period ended June 30, 1999
increased by $1,121,761  to $1,668,526  from $546,765 for the three month period
ended June 30, 1998.  Product sales for the six month period ended June 30, 1999
increased by  $1,680,806  to  $2,498,946  from $818,140 for the six month period
ended  June 30,  1998.  These  increases  were  primarily  the result of product
shipments  to   additional   licensees   since  the  second   quarter  of  1998.
Specifically,  sales  to  Titleist  and  Footjoy  Worldwide  and  Pacific  Coast
Feathers, as well as SteeleVest(R) sales, contributed to these increases.

     Research and development  projects.  Revenues from research and development
projects  for the three month period  ended June 30, 1999  decreased  $34,546 to
$44,875 from  $79,421 for the three month  period ended June 30, 1998.  Revenues
from research and  development  projects for the six month period ended June 30,
1999  increased  by $17,558 to $146,250  from  $128,692 for the six month period
ended June 30, 1998.  These  variances  reflect the timing of work  performed on
funded  United  States  government   research  and  development   contracts  and
undisclosed  private  companies for  potential  applications  incorporating  the
Company's thermal management products.

     Licenses and  royalties.  Revenues  from license fees and royalties for the
three month  period ended June 30, 1999  increased by $114,199 to $162,249  from
$48,050 for the three month period ended June 30,  1998.  Revenues  from license
fees and  royalties  for the six month period  ended June 30, 1999  increased by
$182,612 to $257,280 from $74,668.  This increase  reflects the  recognition  of
fees received from strategic  partners for license agreements entered into after
the second quarter 1998. License fees are recognized as revenue ratably over the
life of the  license  agreement.  Additionally,  the  increase is due to royalty
income  received  from a third party as a result of the  assignment of a license
agreement from Triangle Research Development Corporation ("TRDC") to the Company
in September 1998.

     Cost of Sales.  The  Company's  cost of sales  consists  of: (i) direct and
indirect   costs   incurred  in  connection   with  product   sales,   including
SteeleVest(R);  (ii)  direct and  indirect  costs  incurred in  connection  with
revenue from research and development contracts for the United States government
and  private  companies;  (iii)  royalty  payments  required  to be  made to the
inventor of the thermal  management  technology or another party licensed by the
inventor;  and (iv) the amortization  expense associated with the September 1998
transaction with the inventor to lower the royalty rates. Costs of sales for the
three month  period  ended June 30,  1999  increased  by $889,116 to  $1,489,746
compared to $600,630 for the three month period ended June 30, 1998. The cost of
sales related to products for the six month period ended June 30, 1999 increased
by $1,476,355 to $2,335,339  compared to $858,984 for the six month period ended
June 30, 1998.

     Cost of sales - Products.  The cost of sales  related to  products  for the
     three month period ended June 30, 1999  increased by $741,153 to $1,272,039
     from  $530,886 for the three month period ended June 30, 1998.  The cost of
     sales  related to  products  for the six month  period  ended June 30, 1999
     increased  by  $1,176,541  to  $1,929,240  from  $752,699 for the six month
     period ended June 30, 1998.  These  increases  reflect the higher volume of
     product sales and the corresponding  costs related to such product sales in
     the three  month and six month  periods  ended June 30, 1999 as compared to
     the corresponding periods in the prior year.

     Cost of sales  --  Research  and  development  projects.  The cost of sales
     related to research  and  development  projects  for the three month period
     ended June 30, 1999  increased  by $22,704 to $86,907  from $64,203 for the
     three  month  period  ended  June 30,  1998.  The cost of sales  related to
     research and development projects for a the six month period ended June 30,
     1999 increased by $69,861 to $168,842 from $98,981 for the six month period
     ended  June 30,  1998.  This  increase  reflects  the higher  research  and
     development  revenues  in the six  month  period  ended  June  30,  1999 as
     compared to the corresponding period in the prior year.

     Cost of Sales --  Licenses  and  royalties.  The cost of sales  related  to
     licenses  and  royalties  for the three  month  period  ended June 30, 1999
     increased  by $125,259 to $130,800  from $5,541 for the three month  period
     ended June 30, 1998.  The cost of sales  related to licenses and  royalties
     for the six month  period  ended June 30,  1999  increased  by  $229,953 to
     $237,257  from $7,304 for the six month period  ended June 30, 1998.  These
     increased  are primarily due to  amortization  of intangible  and royalties
     expense related to the September 1998 transaction with TRDC.

     Selling and marketing expense.  Selling and marketing expense for the three
month period ended June 30, 1999 increased by $523,466 to $748,185 from $224,719
for the three month period ended June 30, 1998.  Selling and  marketing  expense
for the six  month  period  ended  June 30,  1999  increased  by  $1,051,318  to
$1,496,185  compared to $444,867  for the six month  period ended June 30, 1998.
This increase was primarily the result of the Company  increasing  its marketing
and  advertising  activity  in order  to build  brand  name  recognition  of its
Thermasorb(R),  ComforTemp(R) and SteeleVest(R)  products and trademarks.  These
activities  included  the  hiring of  additional  sales  personnel,  advertising
placements  in many  national  trade and  consumer  publications  and  tradeshow
participation.  Additionally,  selling expense related to the SteeleVest(R) unit
contributed to these increases.

     General and administrative expense.  General and administrative expense for
the three month  period  ended June 30, 1999  increased  by $334,631 to $976,184
from  $641,553  for the three  month  period  ended June 30,  1998.  General and
administrative expense for the six month period ended June 30, 1999 increased by
$849,594 to  $1,892,140  compared to  $1,042,546  for the six month period ended
June  30,   1998.   The  increase   reflects  the  increase  in  personnel   and
personnel-related  expenses,  including  travel,  and  recruiting  costs  of new
employees.  Additionally,  fees  and  expenses  paid to  consultants  have  also
increased over the comparable  period for the prior year. These increases are in
connection with the expansion of the Company's operations and  commercialization
of its thermal management products.


     Net interest income/expense. Net interest income for the three month period
ended June 30, 1999  decreased by $53,799 to $57,336 from $111,135 for the three
month  period ended June 30,  1998.  The  decrease  reflects the higher cash and
investment  balances,  in the prior year,  due to receipts of proceeds  from the
Initial Public Offering ("IPO") in April,  1998. Net interest income for the six
month period ended June 30, 1999  increased by $18,546 to $132,565 from $114,019
for the six month period ended June 30, 1998.

     Net loss.  As a result of the  foregoing,  the net loss for the three month
period ended June 30, 1999  increased to $1,281,129  from $681,531 for the three
month period ended June 30, 1998.  Additionally,  the net loss for the six month
period ended June 30, 1999 increased to $2,688,622  from  $1,210,878 for the six
month period ended June 30, 1998.

     Liquidity and capital resources.  From its inception through June 30, 1999,
the Company has incurred  cumulative  losses of  approximately  $7,676,000.  The
Company has financed its  operations  to date through  research and  development
contracts  relating to United States  government  programs,  bank borrowings and
issuance of common stock and convertible preferred stock.

     At June 30, 1999, the Company had working capital of $5,685,000,  including
cash and  marketable  securities of  $4,381,000  accounts  receivable  billed of
$1,705,000 and inventory of $792,000,  offset by accounts  payable of $1,027,000
and license fees payable of $258,000.

     Cash  used  by  operating   activities   was   $2,812,000   and  $1,602,000
respectively,  for the six  month  period  ended  June 30,  1999 and  1998.  The
principal factor  contributing to the cash used in operating  activities for the
six month periods ended June 30, 1999 and 1998 were the net loss for each of the
respective periods.  Cash used in investing  activities was $879,000 for the six
month periods ended June 30, 1999. The principal  investing  activities for 1999
were: an installment payment to TRDC for the agreement signed in September 1998,
the purchase of the assets of Steele Incorporated, and the purchase of equipment
for the development facility in North Carolina. The principal investing activity
for 1998 was the purchase of short-term investments.  Cash provided by financing
activities  was  $12,876,000  for the six month period ended June 30, 1998.  The
principal financing activities for the six month period ended June 30, 1998 were
the  receipt  of the  net  proceeds  of  $2,479,000  from  the  exercise  of the
Convertible  Preferred  Stock Option by one holder of record and of  $10,397,000
from the Company's IPO.

     The  Company  is  relocating  its  North  Carolina  operations  to a  newly
constructed  facility located in Winston Salem, North Carolina during the second
half of fiscal 1999. The cash  requirement  with respect to that relocation will
be  expended  in the third and fourth  quarters  of 1999 and total 1999  capital
expenditures are not expected to exceed $1,000,000.

     The Company has a $2,000,000 line of credit with a bank. The line of credit
bears  interest  at the lower of the  bank's  prime  rate or a two point  spread
versus the London Interbank Overnight Rate ("LIBOR") and will expire on June 30,
2000. The full amount of the line is currently available and uncommitted.  It is
the  Company's  intent  to  renew or  replace  the  line of  credit  in order to
accommodate possible future funding requirements.

     The  Company  has  incurred  cumulative  losses  since its  inception  and,
therefore,  has not been subject to significant  federal  income taxes.  Through
June 30, 1999,  the Company has generated net operating  loss  carryforwards  of
approximately  $7,300,000,  which may be  available to reduce  future  available
taxable income and future tax  liabilities.  These  carryforwards  expire in the
year 2018.  The Tax Reform Act of 1986 provides for an annual  limitation on the
use of net operating loss  carryforwards  (following  certain ownership changes)
that  could   significantly   limit  the  Company's  ability  to  utilize  these
carryforwards.  Due to the  cumulative  effect  of the IPO  and  the  subsequent
exercise of options or warrants in connection with other future sales of equity,
the  Company's  ability  to  utilize  the  aforementioned  carryforwards  may be
limited. Additionally,  because the United States tax laws limit the time during
which these  carryforwards  may be applied against future taxes, the Company may
not be able to take full advantage of these attributes for federal tax purposes.

     Based on the Company's  current  operating plan, the Company  believes that
its available cash, cash flow from operations and available line of credit, will
be  sufficient  to satisfy  its  operational  and capital  requirements  through
December 1999. Such belief is based upon certain  assumptions,  and there can be
no assurance that such assumptions are correct.  In the event that the Company's
plans change,  or its available  cash,  cash flow from  operations and available
line of credit are insufficient to fund operations due to unanticipated  delays,
problems,  expenses  or  otherwise,  the  Company  would  be  required  to  seek
additional  financing  sooner  than  anticipated.   Further,  depending  on  the
Company's  progress in marketing its product  lines,  gaining  acceptance of its
thermal  management  technology  and its other  products and services  among the
business community or the  identification of strategic  acquisition or licensing
opportunities,  the  Company  may  determine  that  it  is  advisable  to  raise
additional capital sooner than was anticipated.


     The  Company  is in  the  early  stages  of  evaluating  various  financing
alternatives to increase cash available to fund operations in the Year 2000.


     Inflation

     The  impact  of  general  inflation  on the  Company's  business  has  been
insignificant  to date and the  Company  believes  that it will  continue  to be
insignificant for the foreseeable future.

     Year 2000

     The Year 2000 Issue is the result of computer  programs being written using
two digits rather than four to define the applicable  year. Any of the Company's
computer programs that have  date-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000.  This could  result in a system
failure or miscalculations causing disruptions of operations,  including,  among
other things, a temporary inability to process  transactions,  send invoices, or
engage in similar normal business activities.

     Based  on  recent  assessments,  the  Company  determined  that it will not
require  significant  modifications  of its  hardware  or software so that those
systems  will  properly  utilize  dates beyond  December  31, 1999.  The Company
presently believes that with  modifications of its existing  software,  the Year
2000 Issue can be mitigated.

     The  Company's  plan to resolve the Year 2000 Issue  involves the following
four phases: assessment,  remediation,  testing, and implementation. As of April
30, 1999, the Company has fully completed its assessment of all internal systems
that could be significantly  affected by the Year 2000. The completed assessment
indicated that most of the Company's significant  information technology systems
will not be significantly  affected,  particularly the general ledger,  billing,
and inventory systems.  The Company does not believe that the Year 2000 presents
a material exposure as it relates to the Company's  products.  In addition,  the
Company has begun to gather information about the Year 2000 compliance status of
its external  agents and continues to monitor  their  compliance.  To date,  the
Company  is not aware of any  external  agent  with a Year 2000 issue that would
materially  impact the Company's  results of operations,  liquidity,  or capital
resources.  The Company has requested  from its bank an assessment of the extent
of the  bank's  Year  2000  compliance.  In the  event the bank is not Year 2000
compliant in a timely manner, the Company is prepared to change banks.  However,
the  Company  has no means of ensuring  that  external  agents will be Year 2000
ready.  The inability of external  agents to complete their Year 2000 resolution
process in a timely fashion could  materially and adversely  impact the Company.
The effect of non-compliance by external agents is not determinable.

     The Company  will utilize its  external  software  and service  provider to
reprogram,  test and  implement the software for the Year 2000  modification  as
needed,  the cost of which is not expected to be  significant.  The Company will
evaluate  the  status  of  completion  of Year 2000  modifications  in the third
quarter and will undertake all remaining  necessary  steps to seek to ensure its
systems are Year 2000  compliant.  In the event the Company is unable to resolve
its Year 2000 modifications in a timely fashion, the business of the Company may
be materially and adversely impacted.

     In the  event the  Company's  computer  systems  are  materially  adversely
affected by the Year 2000 issue, the Company's  business and operations could be
materially adversely affected by disruptions in the operations of other entities
with which the Company  interacts.  However,  the Company believes that the most
likely worst case scenario is that there will be some  localized  disruptions of
systems that will affect individual processes,  facilities or service technology
providers  for a  short  time  rather  than  systematic  or  long-term  problems
affecting  its  business  operations  as a whole.  In such event the Company has
contingency plans for certain critical  applications and is working on plans for
others.   These   contingency  plans  involve,   among  other  actions,   manual
workarounds, increasing inventories, and adjusting staffing strategies.

     Forward-Looking Statements

     Certain  information  contained  in this  Quarterly  Report on Form 10-QSB,
including,  without  limitation,  information  appearing  under  Part I, Item 2,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," are  forward-looking  statements (within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities  Exchange Act of
1934).  Factors set forth in the Company's Prospectus filed April 1, 1998, or in
the Company's other Securities and Exchange Commission filings, could affect the
Company's  actual results and could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company in this Quarterly Report on Form 10-QSB.

     Those statements are subject to numerous risks and uncertainties that could
cause actual  results,  performance and  achievements to differ  materially from
those  described  or implied in the  forward-looking  statements,  and  reported
results  should not be considered an  indication  of future  performance.  Those
potential risks and uncertainties  include without limitation the uncertainty of
the economic  environment  for the remainder of this year,  the need for further
development  of  certain  Frisby   Technologies'   products  and  markets,   the
development  of  alternative  technologies  by third  parties,  Year 2000 issues
affecting the Company and its customers and  suppliers,  and the  uncertainty of
market acceptance and demand for the Company's products in the future.

                            PART II-OTHER INFORMATION

     Item 1. Legal Proceedings

     None.

     Item 2. Changes in Securities

     On April 6, 1999, the Company  received  notice from the shareholder of the
Convertible  Preferred  Stock of its  decision to convert the 587,500  shares of
Convertible Preferred Stock shares into Common Stock. This transaction increased
the number of outstanding common stock to 5,708,113.


     Item 3. Defaults Upon Senior Securities

     None.

     Item 4. Submission of Matters to a Vote of Security Holders

     On June 10, 1999, the Company held its Annual Meeting of  Shareholders,  at
which the following items were voted on and approved by the Shareholders:

     (1) The  election of the  following  members of the Board of  Directors  to
another term to expire at the Company's next annual meeting and after successors
are duly elected and qualified:

Greg Frisby (4,408,693 votes "For", 18,300 votes "Against",  0 "Abstained")
Jeffry D. Frisby (4,408,693 votes "For",  18,300 votes  "Against",
           0 "Abstained")
Pietro A. Motta  (4,408,593 votes "For",  18,400 votes "Against",  0 Abstained")
Domenico DeSole  (4,408,593  votes  "For",  18,400 votes  "Against",
           0 "Abstained")
Robert C. Grayson (4,408,693 votes "For", 18,300 votes "Against", 0 "Abstained")

     (2) The amendment of the  Company's  1998 Stock Option Plan to increase the
number of  authorized  shares from  250,000 to 750,000  (3,256,026  votes "For",
51,820 votes "Against", 14,200 "Abstained", 1,104,947 "Unvoted").

     (3) The ratification of the selection of Ernst & Young LLP as the Company's
independent  auditors for the fiscal year ending  December  31, 1999  (4,405,793
votes "For", 15,100 votes "Against", 6,100 "Abstained").

     Item 5. Other Information

     None.






<PAGE>


     Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits

          27.1 Financial Data Schedule

     (b) Reports on Form 8-K

          None.




<PAGE>


                                   Signatures


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

     Dated: August 16, 1999

                                      FRISBY TECHNOLOGIES, INC.



                                   By: /s/ Gregory S. Frisby
                                       ---------------------
                                       Gregory S. Frisby
                                       President and Chief Executive Officer



                                   By: /s/ Stephen P. Villa
                                       --------------------
                                       Stephen P. Villa
                                       Chief Financial Officer